48 percent of South African firms identify new 3 percent target
A South African Reserve Bank study shows 48 percent of surveyed firms correctly identified the lowered 3.0 percent inflation target shortly after its November 2025 adoption. The findings indicate that corporate price setters are attentive, reducing risks of sticky expectations.
Forty-eight percent on target
The Bureau for Economic Research (BER) surveyed 133 firms in the fourth quarter of 2025, just days after the official lowering of the inflation target to 3.0 percent with a 1.0 percentage point tolerance band on November 12, 2025.
Among the 125 responding businesses, 48.0 percent accurately named 3.0 percent as the preferred target.
An additional 38.4 percent placed the target between 3.0 percent and 4.5 percent, with half of this group selecting 3.5 percent.
Only 4.0 percent of firms cited the previous 4.5 percent midpoint.
Of the companies correctly identifying the 3.0 percent target, 61.0 percent cited the formal announcement by the Minister of Finance as their primary source of information.
Overcoming the historical lag
Historically, South African firms adjusted expectations slower than financial analysts and trade unions, taking seven quarters during the 2017 shift to 4.5 percent.
However, heightened post-pandemic inflation sensitivity accelerated learning in 2025.
Businesses across all survey groups steadily revised two-year-ahead inflation expectations downward throughout the year.
Median expectations fell by 1.30 percentage points for target-aware firms and by 0.77 percentage points for other respondents.
Attention beats inertia
The survey provides clear evidence that corporate price setters are not clinging to outdated inflation targets.
High public attentiveness substantially reduces the output sacrifice needed to achieve the 3.0 percent objective.
Central bank credibility will now hinge on keeping realized headline inflation near this target.
Source: Do firms know about the new inflation target?
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